Path to successful diversity program varies with company culture

Companies recognized for exemplary diversity may follow a core set of motives and behaviors, but best practices alone do not always contribute to a high level of diversity, according to a recent RAND Corporation study. “Numbers alone are an inadequate measure of diversity,” said Jeff Marquis, the study’s lead author and a political scientist at RAND, a nonprofit research organization. To reap the true benefits of diversity — like enhanced productivity, profitability and overall job satisfaction — a company has to accept and integrate an inclusive diversity program into its social and business fabric.

While diversity programs help boost raw diversity numbers — ensuring a racially and ethnically mixed workforce — they may fall short of promoting personal development and higher levels of job satisfaction among both minority and non-minority personnel, according to the report.

The report, titled “Managing Diversity in Corporate America,” lays the groundwork for a fact-based approach to diversity management by determining to what extent best practices literature describe the ways to enhance a company’s diversity. Researchers found that companies often strive for surface diversity‚ by focusing on short-term recruiting to attain a certain percentage of minority employees, rather than seeking comprehensive diversity management programs.

In determining what constitutes an effective diversity management program, the report compares the actual practices of eight successfully diverse companies ranked among Fortune magazine’s
Best Companies for Minorities” against what existing diversity literature says about motivations and effective strategies for achieving diversity.

The authors then made a second comparison, contrasting these companies against six others classified under Fortune magazine’s “Best Companies to Work For”–those recognized for their exemplary human resources departments, but not for their level of diversity. The selected companies were chosen to represent a mixture of different sizes, locations and industry types.Not surprisingly, firms recognized as leaders in diversity management were more likely than those known for their superior human resources practices to support strong diversity initiatives, the report concluded. And while best diversity companies favored diversity for reasons related to boosting business performance, best human resources companies stressed non-business reasons like an enhanced work environment that results from improvements in basic recruiting, retention and promotion programs.

“Much of the diversity literature places a huge emphasis on diversity as a way of improving a company’s bottom line,” Marquis said. The relationship between performance and profitability is an important motivator for companies to adopt comprehensive diversity management programs, even if it is not the case in every situation.

Besides motivations for diversity management, both groups differed in terms of implementing best practices concerning leadership and methods of evaluation, according to researchers. The best diversity companies generally fulfilled all or the majority of best practices, while the best human resources companies fulfilled none or just a few of the best practices.

The study also highlighted the limitations of existing diversity literature, pointing out that it lumps all companies together, rather than taking into account each unique company’s unique goals, resources, number of employees, business locations, product lines and customer bases.

Among other key finding of the study:

• Best diversity companies were concentrated in certain industries, such as accommodation/food and arts/entertainment, while best human resources companies tended to be in the health care and professional services sector.
• Factors that may have a significant impact on a company’s level of diversity include its size, age and geographic location.

The study was conducted in the public interest and supported by RAND using discretionary funds made possible by the generosity of its donors and the fees earned on client-funded research. Other authors of the report are Nelson Lim, Lynn M. Scott, Margaret C. Harrell and Jennifer Kavanagh. 

The study was done through RAND Labor and Population program, which examines issues involving U.S. labor markets, the demographics of families and children, social welfare policy, the social and economic functioning of the elderly, and economic and social change in developing countries.

The report is available at http://www.rand.org/pubs/occasional_papers/OP206/.

The RAND Corporation is a nonprofit research organization providing objective analysis and effective solutions that address the challenges facing the public and private sectors around the world.